Hong Kong exporters cautiously optimistic amid lingering trade tensions

December 17, 2018

HONG KONG - The global economy may encounter increasing uncertainties and slower growth in the year to come, according to a survey of exporters released today bys the Hong Kong Trade Development Council.

While the cyclical recovery in the major industrial economies is expected to continue, growth momentum is likely to falter amid trade tensions and less accommodative monetary conditions, the survey says.

At the same time, many of the emerging economies are expected to enjoy a near-term improvement, largely on account of a recovery in global demand and improved commodity prices. Higher oil prices, however, could put pressure on those nations with large external payment deficits.

Fifty-one per cent of Hong Kong exporters expect their sales to increase or remain unchanged over the coming year.

They say that while the world's cyclical economic recovery may warrant an optimistic outlook over the short-term, there is also an awareness that rising trade protectionism and geopolitical friction may see the underpinning fundamentals deteriorate, disrupting trade and investment flows and undermining long-term growth.

Drilling down into the particulars of the Hong Kong economy, the survey shows that the Sino-US trade dispute is yet to have a significant negative impact on export levels, partly because of strong underlying demand and partly because some exporters opted for earlier shipment in order to pre-empt the implementation of the tariffs.

Overall, in the first 10 months of 2018, Hong Kong's total exports grew by 9.8% year-on-year, following an 8% increase in 2017 as a whole.

In terms of markets, the growth of Hong Kong's exports was broadly based with regards to its traditional export destinations, with trade with the US and the EU significantly up, while its exports to Japan were the lowest among all its major markets.

With regards to developing Asia, exports to China and the ASEAN bloc maintained their momentum, partly down to the region's extensive production network and partly on account of rising demand for consumer goods.

Outside developing Asia, a number of other emerging markets recorded more impressive growth, with exports to emerging Europe up 34%, Latin America 16% and Africa 16%.

Product-wise, electronics remained the primary driver of growth, up 14% year-on-year during in first 10 months of 2018 and accounting for about 68% of Hong Kong's total exports.

In the clothing sector, where exporters have been exposed to increased competition from alternate production bases, exports showed a decline of 3.3%. www.hktdc.org (ATI).